The rate of interest in a bank is 3% pa and the rate of inflation is 4% pa. If a person has the funds in the bank now to buy 20 kg of a fruit, how much fruit in kg could they buy in a year's time...

The rate of interest in a bank is 3% pa and the rate of inflation is 4% pa. If a person has the funds in the bank now to buy 20 kg of a fruit, how much fruit in kg could they buy in a year's time if they leave the money in the bank?

A person can buy 20 kg of fruit right now with the funds available. The rate of inflation is the rate at which the prices increase. As the rate of inflation is 4% per year, if the price of the fruit is X right now, after a year it would be 1.04*X. An amount P deposited in a bank offering a rate of interest p% per year increases to (1+p/100)*P. The rate of interest in the bank is 3% per year. If an amount P is deposited today, the amount after a year would be P*(1.03).

20 kg of fruit can be bought right now. If the price is X, the amount with the person is 20*X. After a year, the person has 20*X*1.03 but the price of fruit is X*1.04.

As a result the number of kilograms of fruit that can be bought is `(20*X*1.03)/(X*1.04)`